A typical job lasts for about five years, according to Forbes magazine. The average marriage lasts about eight years, according to the Census Bureau. But figures from the Social Security Administration show that the average American is retired for over 20 years.
1. Figure out what you want to do in retirement. If you approach retirement like an extended vacation, you'll probably be disappointed. There's nothing wrong with wanting to do more gardening or play more golf. But most satisfied retirees also look beyond themselves to set real-life goals, whether it's starting their own business, writing a family history, traveling to all seven continents or taking care of their grandchildren.
2. Are you going to work? According to one survey, three quarters of today's workers expect to work part time after they retire. But only about one quarter of retirees actually do. Why the difference? Many people believe their old employer will hire them back as a consultant, or they think they can land an interesting new job. But expectations often don't match reality. If you plan to work after retirement, scope out your opportunities ahead of time.
3. Decide where you're going to live. The typical retirement dream involves riding off into the sunbelt, golf clubs and beach umbrella in hand. Many retirees do take that route and are happy for it. Others decide to move near their grandchildren or retire overseas. But the majority of retirees never leave home. They may downsize, but they stay close to friends and relatives.
4. Figure out your health insurance. For most people this means signing up for Medicare at age 65, along with a supplemental insurance plan. But if you retire before age 65, you need to obtain your own health insurance. Many people can keep coverage from an old employer, or get insurance through a professional association. The Affordable Care Act also now brings new options to early retirees. Whatever your situation, make sure your health insurance doesn't lapse.
5. Take inventory of your assets. The main difference between working and retirement is that you no longer get a paycheck in retirement. Many experts insist you need $1 million in assets to support a comfortable retirement. Some say less; others say more. You should take a realistic picture of your financial assets, including pensions, retirement accounts and all other resources (don't forget to factor in your debts) to see if you have the resources to support yourself for 20 or 30 years.
6. Determine where your retirement income will come from. You must turn your assets into the stream of income you'll need to pay your bills. Add up your monthly income from pensions, Social Security and any other sources. Then figure out how you're going to produce income from your retirement accounts and personal savings. It can be a complicated process, so consult a professional if you need help.
7. Decide when to sign up for Social Security. Conventional wisdom says you receive full benefits once you hit full retirement age, which is 66 for most of us. The better way to look at it: you're eligible to begin benefits anytime between age 62 and 70, on a sliding scale. The longer you wait, the bigger your check.
8. Account for unexpected expenses. Consider how you'll handle non-routine expenses in retirement such as a large medical expense or major home repair. Will you have to help support a grandchild? Do you want to leave an inheritance for children or a favorite charity? Also, consider the effects of inflation over time and the risk of outliving your assets.
9. Consult your spouse. Retirement planning is nothing but a pipe dream if you haven't talked it over with your significant other. The sooner you start talking, the better your planning will be. Also, share your hopes and aspirations with your children and close friends so they know where you're headed.
10. Make a plan. Now that you've collected your thoughts and analyzed your situation, don't just sit there. Make your retirement plan. Dream big. Think outside the box. Share your thoughts. Then get ready to enjoy the retirement of your dreams.
Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement and other concerns of baby boomers who realize that somehow they have grown up.